As opportunities in the Permian basin wane, U.S. shale producers are looking north to Canada’s Montney shale formation in 2025. This expansive shale basin, straddling northeast British Columbia and northwest Alberta, is attracting sizable mergers and acquisitions activity owing to its lower drilling costs and abundant resource inventory. The Montney shale has become a strategic target for American drillers and private equity eager to find new drilling inventories.

Montney Shale Basin: A New Frontier for Shale Expansion

After more than 15 years of rapid drilling, U.S. shale production in the Permian basin is facing higher development costs and fewer premium drilling sites. According to Michael Spyker, principal analyst at HTM Energy Partners, drilling locations in the Permian now cost up to six times more than comparable sites in the Montney, a gap that was only double a few years ago. This wide cost difference is prompting U.S. operators to expand their activities into Canada.

The Montney currently produces around 10 billion cubic feet per day of natural gas, roughly half of Canada’s total gas output. Key Canadian companies such as ARC Resources and Tourmaline Oil have secured extensive acreage to support growth in Canada’s liquefied natural gas export market. While its oil production is modest—just over 90,000 barrels per day—it has more than doubled over the last decade, leveraging horizontal drilling technologies akin to those that fueled the U.S. shale boom.

Surge in Mergers, Acquisitions, and U.S. Interest

In 2025, the Montney represented 28% of the total oil and gas deal value in Canada, amounting to approximately C$8.6 billion, according to Sayer Energy Advisors. U.S.-based companies have been notably active. Ovintiv expanded its Montney position in November with a $2.7 billion acquisition of NuVista Energy. Additionally, Cygnet Energy, backed by U.S. private equity firms NGP Energy Capital Management and Carlyle, purchased Kiwetinohk Energy, which holds Montney assets as well as interests in the Duvernay shale.

Other U.S. firms such as SM Energy, EOG Resources, and Chord Energy have shown interest by bidding on Montney assets, although some bids were unsuccessful. Halliburton Canada’s Vice-President John Gorman praised the basin as a “world-class condensate and gas resource” with more than 45 years of drilling inventory at current development rates, compared to just around 11 years remaining in the Permian according to Enverus estimates.

Policy Shifts and Market Dynamics Driving Growth

Foreign investment in Canadian oil and gas decreased substantially following 2015, triggered by oil price drops, ESG investing pressures, and regulatory uncertainty. During this period, many global majors exited Canada’s oil sands, causing underinvestment in plays like the Montney. Ovintiv CEO Brendan McCracken described the abundance of undeveloped resources as a “silver lining” amid the maturation of U.S. shale reserves.

Last year’s completion of the Trans Mountain pipeline expansion has enhanced Canadian oil export capacity. Meanwhile, new Prime Minister Mark Carney has adopted a more supportive stance towards fossil fuel development, promising to revise climate and regulatory policies to encourage investment growth. Chris Carlsen, CEO of Birchcliff Energy, acknowledged Canada’s “unique challenges” but welcomed the improved political tone as a factor increasing U.S. operator interest.

Shale: Market Outlook

The Montney shale basin’s combination of abundant remaining drilling inventory, lower land and development costs, and an evolving regulatory landscape secures its position as a key target for U.S. shale producers looking beyond saturated domestic fields. With C$8.6 billion in M&A deals so far this year, including significant transactions by Ovintiv and private equity-backed groups, the basin remains central to North America’s shale energy scene. Investors and industry watchers will be closely observing how ongoing policy changes under Carney shape future investment and development in this critical Canadian shale play.